Exam 2: An Introduction to Cost Terms and Purposes

On the assembly floor, Cynthia Evans is paid $20 an hour for straight-time and $30 an hour for overtime. One week she worked 43 hours, which included 3 hours of overtime. Required: a. What is Cynthia's total compensation for the week? b. What amount of compensation would be reported as direct manufacturing labor? c. What amount of compensation would be reported as manufacturing overhead?

Using the following information find the unknown amounts. Assume each set of information is an independent case.

The income statement of a manufacturing firm reports:

Improvements in information-gathering technologies are making it possible to trace more costs as direct.

Merchandising companies hold only one type of inventory: direct material.

Which one of the following is a variable cost for an insurance company?

The list of representative cost drivers in the right column below are randomized with respect to the list of functions in the left column. That is, they do not match. Required: Match each business function with its representative cost driver.

Indirect manufacturing costs include the compensation of all manufacturing labor that can be traced to the cost object in an economically feasible way.

Answer the following questions using the information below: -What is operating income for 20X3?

Merchandising companies purchase products and sell them to customers without changing their basic form.

A costing system traces direct costs and allocates indirect costs to products.

Explain the difference between an inventoriable cost and a period cost. What potential problems does an inaccurate classification of product and period costs cause?

Currently, most administrative personnel costs would be classified as fixed costs.

Which of the following is a fixed cost for an automobile manufacturing plant?

The cost of inventory reported on the balance sheet may include all of the following EXCEPT:

Wheel and Tire Manufacturing currently produces 1,000 tires per month. The following per unit data apply for sales to regular customers: The plant has capacity for 3,000 tires and is considering expanding production to 2,000 tires. What is the total cost of producing 2,000 tires?

Answer the following questions using the information below: The East Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: -What are the fixed costs per unit associated with Product ORD203?

In the manufacturing plant, Terri Bird is paid $40 an hour for straight-time and $60 an hour for overtime. One week she worked 46 hours, which included 6 hours of overtime, and 4 hours of idle time caused by material shortages. Required: a. What is Leslie's total compensation for the week? b. What amount of compensation would be reported as direct manufacturing labor? c. What amount of compensation would be reported as manufacturing overhead?

Overtime premium consists of the wages paid to all workers (for both direct labor and indirect labor)in excess of their straight-time wage rates.

Springfield Manufacturing produces electronic storage devices, and uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and indirect manufacturing costs. Total indirect manufacturing costs for January were $300 million, and were allocated to each product on the basis of direct manufacturing labor costs of each line. Summary data (in millions)for January for the most popular electronic storage device, the Big Bertha, was: Required: a. Compute the manufacturing cost per unit for each product produced in January. b. Suppose production will be reduced to 30,000 units in February. Speculate as to whether the unit costs in February will most likely be higher or lower than unit costs in January; it is not necessary to calculate the exact February unit cost. Briefly explain your reasoning.